Deputy Prime Minister: Increase state capital in PPP projects to attract investors

According to the current PPP Law, there are 5 fields to be invested in under the PPP method, including transportation; power grids, power plants; irrigation, water supply and drainage (clean water, wastewater and waste treatment); healthcare, education and information technology infrastructure. In particular, the minimum capital to implement these projects is 100 billion VND for health and education projects and 200 billion VND for remaining field projects. However, in reality, the recent implementation has been inadequate.

Submitted to the National Assembly on October 30 the Law project amending and supplementing a number of articles 4 of the Law (Planning; Investment; Investment in the form of public-private partnership – PPP; Bidding), the Government proposed without restrictions field, minimum capital size for PPP projects. In addition, the proportion of State capital is also proposed to increase from 50% to 70% of the total investment for projects with site clearance costs accounting for more than half, in difficult areas or receiving high technology transfer. .

Commenting at the group discussion, Deputy Prime Minister Nguyen Hoa Binh said that if businesses were to participate 100% in the PPP project, “they would not be able to call anyone”. According to him, the State must account for a high proportion and businesses should participate partly, then they will be lucky to do it. Not to mention, there are projects that have difficulty calling for investors to participate in PPP, so the State capital contribution ratio must be increased here.

“To attract investors to difficult projects, the State’s contribution must exceed the current rate of 50% but not more than 70%,” he said.

Explaining the increase in State capital contribution in PPP projects, Minister of Planning and Investment Nguyen Chi Dung said that site clearance or complex technical items often take up large implementation resources, the State needs to put money into investment.

But according to Mr. Hoang Van Cuong, Member of the Finance and Budget Committee, these are just isolated cases. Mr. Cuong analyzed that if a PPP project enterprise has 70% state capital, it will become a state-owned enterprise. This causes inequality between PPP project enterprises and other state-owned capital units. “Increasing the minimum state capital in PPP projects to 70% is inconsistent with current regulations on classification and management of state-owned enterprises,” he said.

The member of the Finance and Budget Committee proposed to separate the PPP project from the site clearance part. The State will pay the capital for site clearance and this cost is not included in the overall capital contribution in the PPP project, to ensure that the State capital here is 50%.

“Thus, projects that need site clearance are more or less equal. This rule also applies to projects with complex technical works,” he said. Along with that, the Government needs to have a risk handling mechanism and stipulate the responsibilities of project approval agencies to share risks with investors.

Mr. Nguyen Phi Thuong, Director of Hanoi Department of Transport, commented that PPP and BT projects (new investment in the form of build-transfer) are bottlenecks in many localities. Vietnam spent large resources on infrastructure, but when the PPP Law took effect, Mr. Thuong said “almost everything stopped”.

Mr. Thuong cited the transport infrastructure sector, which has a large capital need but the budget capital can only meet about 30%, the rest is mobilized from other resources. “At this time, we need to consider expanding investment fields using PPP capital to mobilize social resources for infrastructure projects, otherwise it will be difficult to meet infrastructure requirements and national competition,” he said.

However, he believes that when repairing, it is necessary to be comprehensive and open completely. For example, there are currently many investment methods other than PPP, such as EPC+F – which means turnkey contracts and financial support. The locality works directly with the contractor providing EPC contracts and capital for the project. This method is commonly applied in China.

He said that many foreign investors entering Vietnam want to invest according to the EPC+F method, but Vietnam does not have regulations on how to apply it.

“There needs to be comprehensive openness to develop infrastructure and local levels do not have to be afraid or timid when implementing projects of this type,” Mr. Thuong commented.

New investment projects in the form of BT stop implementation from the effective date of the PPP Law (January 1, 2021). In the draft law, The Government proposes to continue implementing the BT contract payment and additional categories do not require payment. This type of contract applies to infrastructure works and public services proposed by the investor and transferred to the State without requiring payment of construction investment costs.

According to the Minister of Planning and Investment, compared to public investment, investing under BT contracts has advantages, such as taking advantage of capital from the private sector, investors can actively source capital to accelerate construction. . Some localities such as Hanoi, Ho Chi Minh City, and Nghe An were allowed by the National Assembly to apply BT contracts, while many other localities proposed to continue implementing this type of contract. Therefore, he believes that expanding application is necessary to fully exploit the advantages of this type of contract.

However, Mr. Vu Hong Thanh, Chairman of the Economic Committee, proposed to assign the Government to provide detailed instructions on the procedures and mechanisms of BT contracts, according to the principle of innovating the way of implementation and payment to investors. private. This is to minimize inadequacies and prevent loss, waste, and negativity from occurring.

At this point, Minister Nguyen Chi Dung said that the Government will develop a process for implementation and payment to investors. Accordingly, the total investment of BT projects must be determined accurately, avoiding falsely increasing the value of the project; Bidding to select investors. The payment mechanism for investors (in land, money) must be specifically and transparently determined from the project planning stage.

Along with that, the contract management mechanism must be strict, avoiding late payment interest, increasing total investment…